March corn finished at $3.52 ¾, up 3 ½ cents. Crude oil closed around $2/barrel firmer, which helped corn, as did the US employment data forcing to dollar lower. Also supportive is continued uncertainty over the Argy farmers dispute with the government. Even just the threat of a strike may be enough to put buyers off, sending a little bit of extra export business to the US.

Soybeans

March soybeans closed at $8.79, up 16 ½ cents. As with corn support came from crude, the dollar and the Argy situation. US farmers are reluctant sellers at the moment sending spot bids and basis higher as physical supplies get squeezed. If Argy farmers loose their patience next week nearbys could go higher yet. With the Argy peso declining farmers there see little incentive to sell old-crop beans at the moment and stump up the 35% tax.

Wheat

March CBOT wheat settled at $5.16 ¼, up 12 ¼ cents. Wheat benefited from spillover strength from soybeans, and remaining concerns over the state of the US crop on the Southern Plains. Little or no rain has fallen in parts of Kansas, the largest US producer, in the past 90 days, according to the US National Weather Service. Reports of farmers in some areas "burning down" wheat crops in readiness to plant corn instead may make harvested acres considerably lower than planted acres. And they were already down 5 million as it was.

EU wheat futures closed up Friday, with UK futures sharply higher on the outlook for a significantly lower crop in 2009.

Paris May milling wheat closed up EUR1.75 at EUR137.50/tonne, whilst London May feed wheat ended up GBP4.25 at GBP112.00/tonne.

Traders are starting to focus on a large reduction in the size of the UK crop in the coming season.

With farmers reporting backward winter wheat is emerging from dormancy in relatively poor condition. A combination of late planting and cold and wet soil looks set to slash UK production to around 14mmt, maybe less.

Defra say that as a whole 14% less wheat has gone into the ground in England, with plantings in the west and the north most reduced. Overall 1.635m ha of wheat has gone into the ground in England. "Up north" things are even worse, 22% less has been planted in Scotland, they say.

With Cerestar's plant in Manchester having switched from maize to wheat in April last year, and the Ensus plant in Teeside set to be fully operational by harvest this year, there is 2 million tonnes more domestic wheat demand that didn't exist twelve months ago from thos two plants alone.

And here we are, now facing a crop some 3.5mmt lower, and that is only IF we manage a decent yield of 8mt/ha. Just suppose yields are below average, as I expect they will be?

The last time we planted a crop of 1.635m ha was in 2001, that year production was just 11.58mmt. Let's hope we do end up carrying old crop into new, it looks like we're gonna need it.

UK nitrogen prices have come down with a bump, although an estimated 80% of UK farmers won't be in a position to take advantage of it as they have already bought, according to the Farmers' Guardian.

GrowHow have cut £60/tonne off their price this week and Yara is expected to follow suit shortly, they add.

Who was it saying not that long ago that you'd better buy it now or you won't get it? It's slipped my mind.

"We think this is a short-term market shift, arising from a lull in demand and the credit crunch."

Falls in the price of ammonia and urea are an "over correction".

"There is nothing left for sale anywhere on the international market, its all gone. Luckily though we've got seventeen vessels of the stuff on the way to the UK as we speak. But that's all sold. Twist my arm, we could probably squeeze a few more orders in before prices go up next month."

"And whilst we're at it that drive needs doing. Have you ever thought about a conservatory? That pointing looks awful, the whole lots going to fall down at any minute. I've got a lorry load of tarmac you can have for half price. Look at the state of that guttering. Whilst we got the van in the area you can have one half price. You can have all your gas & electric for a fraction of whatever your paying now. It's a special offer that ends today. Oh look, I've only got one left. It pays for itself after three months. All your neighbours have signed up. You just can't get them in green. Don't worry about that, bit of T-Cut that's all it needs. It had a brand new engine fitted yesterday but I've lost the receipt. Come on I'm trying to do you a favour here Guv, and I'll even throw in a pigs dick for the dog."

What a difference twelve months can make. A year ago Ukraine was looking forward to a bumper grain and oilseeds harvest and cashing in on soaring world commodity prices.

Ukraine reaped a record grain harvest in excess of 53 million tonnes last year, 25.9 million tonnes of it wheat, propelling it to overtake Argentina (who in contrast had a disastrous wheat harvest) into fifth place in the list of the world's largest wheat exporters.

But twelve months down the line things look much different.

The wheat harvest in Ukraine will decline by 29.7% to 18.2mmt in 2009, according to the International Grains Council.

Ukrainian oilseed rape and wheat producing giant Landkom International PLC said today that it had been forced to raise £4.8 million from investors just to see it past this year's harvest.

The company increased it's plantings threefold for the 2008 harvest, increasing it's land bank to 115,000 hectares. This year things are much different, the company is said to be scaling back it's operations, cutting initial plans to sow 54,000 hectares this year down to just 34,000 hectares. Landkom says it has also postponed investments and expansion plans.

So why has it all gone horribly wrong for the Ukraine? Well, of course falling grain and oilseed prices have got something to do with it, but there is much more to it than initially meets the eye.

Businesses, and residents, in the Ukraine have made many painful adjustments in the wake of the global economic downturn. But as 2009 progresses, they are having to endure at least one more headache: aggressive tax collecting from a revenue-starved government.

Ukraine law says that businesses like Landkom can reclaim value added tax paid on grain that was exported and not consumed in the country.

There's just one small problem.

“When a tax officer came to do an inspection, they said to my accountancy team and auditors that they are laughing at us for claiming the refund, because the state simply does not have any money to pay us,” a Landkom representative is quoted as saying.

Tax experts say that the experience of Landkom is becoming increasingly common.

The tax authorities are said to be deliberately targeting medium to larger-sized businesses looking for supposed tax violations in an attempt to try to bridge a gaping budget deficit.

A recent report done by PricewaterhouseCoopers, the International Monetary Fund and the World Bank entitled “Paying Taxes 2009. The global picture,” ranked Ukraine 180th out of 181 countries in terms of the ease of paying taxes. Rampant red tape, corruption and the overall complexity of the tax system are the main problems in Ukraine’s tax system, according to the study.

March corn futures settled lower this session. Bearish pressure from lower crude oil futures and a higher US dollar index during trading weighed on corn futures. This morning the USDA released its weekly export sales report for the week ending February 26. Net sales of US corn exports were near 792,000 metric tons, a 76% increase from the previous week and was above trades estimates ranging 450,000 to 750,000 metric tons. Continuing conflicts over the proposed semi-nationalization of the grains trade in Argentina between the government and farmer groups there gave some support to US corn futures. Cash corn bids were mixed around the Midwest earlier on the day. March corn settled at $3.49 ¼, down 6 cents.

Soybeans

March soy complex finished lower for the day. Like corn, bearish pressure from lower crude oil futures and a higher US dollar index during trading weighed on the soy complex. This morning the USDA released its weekly export sales report for the week ending February 26. Net sales of US soybean exports were near 156,000 metric tons, a market year low at a54% decrease from the previous week, and well below trade estimates ranging 400,000 to 700,000 metric tons. Net sales of US soy meal exports were 117,000 MT, a 20% decrease from the previous week and fell within trade estimates ranging 75,000 to 125,000 MT. Net sales of US soy oil exports were near 13,600 MT, a 59% increase from the previous week and above trade estimates ranging 5,000 to 10,000 MT. Continuing conflicts between the Argentine government and farmer groups gave some support to US soy futures. Cash soy bids around the Midwest were mixed earlier today. March soybeans finished at $8.62 ½, down 13 cents.

Wheat

March wheat futures in all three grain exchanges closed lower moving in today’s session. A higher US dollar index and lower US stock market during trading provided pressure to wheat futures. The USDA this morning reported net sales of US wheat exports for the week ending February 26 were 285,000 metric tons, a 39% decrease from the previous week and fell below trade estimates ranging 350,000 to 450,000 MT. Japan reportedly purchased 55,000 MT of US wheat announced earlier. Updated forecasts for the HRW wheat crop areas of Kansas, Oklahoma, and Texas indicated no significant chances of rain for the next week and a half. This weather news item provided some support to wheat, offsetting some losses. March CBOT wheat closed at $5.04, down 7 ¾ cents.

EU wheat futures closed lower Thursday with Paris May milling wheat futures ending down EUR0.50 at EUR135.75/tonne, and London May feed wheat closing down GBP1.25 at 107.75/tonne.

Export interest for EU wheat remains light, Syria are in the market for 200,000mt wheat in a tender expected to be announced next week. Russia is likely to pick up the business as they did when Syria were last in the market a few weeks ago.

EU wheat appears to have largely emerged from winter dormancy in pretty good condition. It now remains to be seen how much inputs, or the lack of, will influence final yields.

The overnight grains closed lower, pulling back from some of last night's gains, as crude oil retreated. Beans ended down around 6-7 cents and wheat & corn both down around 5 cents.

Futures had been supported earlier after China announced a $26 billion stimulus package and said it expected to achieve 8% growth in 2009.

There are still concerns for US wheat in the Plains, with various weather forecasters differing over how much rain relief may be in sight for crops there.

Japan bought 118,000mt wheat overnight - 55,000mt of it from the US. Syria is tendering for 200,000mt any origin wheat. They bought Russian last time and are likely to do the same again now.

Australia is struggling to get it's act together on the export front, with severe congestion reported in Western Australia state, and importing nations like South Korea and the Philippines threatening to take their business elsewhere.

The Rosario Exchange has estimated the Argy soy crop at 41.7mmt (compared to the USDA's 43.8mmt), saying that too much irreversible damage was done before February rains arrived.

If that is true for beans then it must apply even more for earlier planted corn, that crop is seen down 36% on last year to 14mmt, they say, although that is half a million more than the USDA's last estimate.

In the USDA's Weekly Export Sales Report here's what we got for w/e Feb 26:

Russia has exported 14.1 million tonnes of grain this agricultural marketing year (July 1, 2008 to July 1, 2009), the press service of the Russian Agriculture Ministry said.

The President of the Russian Grain Union Arkady Zlochevsky said, “Russia plans to export at least 18 million tonnes of grain this season, thus beating the record of 2002-2003. Adding that "additional incentives may increase grain exports to 20 million tonnes."

Meanwhile, a grain terminal at Russia’s Tuapse Commercial Seaport on the Black Sea will open in June, the press service of the Krasnodar Region government said earlier this week.

The terminal is designed to handle 2 million tonnes of grain annually. Investment in its construction amounted to 1.7 billion rubles. The terminal will consist of a grain bunker with a capacity of 103,000 tonnes, a railroad station, and a berth for ships with carrying capacities of up to 50,000 tonnes.

Lovable eccentric Hugo Chavez has seized control of a Cargill-owned rice mill in Portuguesa State, Venezuela, saying that it was guilty of not distributing rice at government imposed prices.

Big Hugh clearly has a downer on all things American. Cargill have thirteen rice mills in Venezuela according to some research I've done, yet Reuters are reporting that the company says it only has 2% of the Venezuelan rice market.

Other media reports appear to suggest that Chavez is taking control of all Cargill's rice producing operations, and running them out of town.

"Let the expropriation of Cargill begin," Chavez is quoted as saying on Venezuela's state-owned channel VTV.

China has unveiled an ambitious $26 billion support program aimed at boosting domestic commodity reserves and supporting its local economy in the face of the global recession.

The county's Finance Ministry has said it will raise it's spending on reserves of grain, edible oils and other materials like steel by 61% to over 178 billion yuan ($26 billion).

The bulk of that will go on agriculture, where it will increase spending by 120 billion yuan ($17.5 billion) and raise the minimum wheat price by 0.22 yuan (13%), it said.

"We will stabilise the prices of major agricultural products, such as grain, edible vegetable oil, cotton, sugar and hogs, through a combination of control policies, including raising price floors, manipulating reserves, temporary purchasing and stockpiling, shipping to other regions and exporting and importing," they said.

Now that's what I call a support program. They might have an appalling human rights record, but at least they can make the buses run on time. Well in China!

The newly agreed deal between Argentine farmers and the government increasing the beef export quota by 60,000 tonnes might be good news for the meat industry on paper, but there are still government controls to contend with. These mean that a beef plant must sell a minimum of 65% of beef production on the home market before it can take advantage of the increased export quota.

Also the beef industry, which saw an estimated on million cattle perish to drought earlier in the season, must still find an export home for it's product.

That might be easier said than done. Unconfirmed reports I am reading this morning suggest that 70% of Argy beef exports usually go to Russia. Apparently only a year ago Russians were flying in to Argentina with suit cases full of cash to buy cheap beef. The recent economic problems and lack of credit has all but closed that market down I gather.

It seems that the Argy government may have got the farmers thinking they have given them something, when in fact they've given them very little at all. President Fernandez may be even cuter than I thought.

A cold and wet weather pattern will set up for the US over the next five days and last into mid-March, says Allen Motew of QT Weather.

Heavy rain will fall from East Texas to Tennessee with lighter amounts over the Plains and SE. The result will be drought relief for parts of Oklahoma and Texas and “some precipitation” for the winter wheat crop over the Plains and Ohio Valley, he says.

As a reminder that winter has not gone away yet, the 8-14 day forecast sees the entire US under the grip of below normal temperatures:

Forget all the rhetoric trotted out by President Fernandez, Production Minister Debora Giorgi and Interior Minister Florencio Randazzo about how they hope that they have reached an accord with the Argy farmers.

The concessions on the table don't add up to an awful lot in my opinion (see here).

Meanwhile would you want to deal with a government whose new state agency ONCCA, which took over crop administration duties from the Agricultural ministry last year, has a set of rules so convoluted that Harry Houdini himself would struggle to find a way through them?

Imagine, if you will, operating in an environment where all grain movements must be faxed through to their office by farmers or traders ON A DAILY BASIS!

Once you have done that, you must then hand in a report of such grain movements to a ONCCA office BY HAND no less, no posting allowed, EVERY SINGLE WEEK!

Crude oil was up $1.58, or almost 4%, to $43.23/barrel after better than expected manufacturing data from China boosted hopes that demand from that quarter may increase.

Further production cuts by OPEC are expected next week, possibly more than 4 million barrels/day, according to some reports. In the US, Energy Dept data due later today is expected to show inventories rising by around one million barrels.

EU diplomats voted yesterday to place punitive import duties on US biodiesel.

Despite the positive spin put on things by the Argentine government, a full blown accord with the farm groups down there seems far from being a done deal.

That will keep nearby tightness in place, at least for the time being with the soy harvest only 18% complete in Brazil according to Celeres.

Celeres also said that the crop was 34% sold going forward, which is substantially lower than twelve months ago.

Chinese soymeal demand is seen slowing as migrant workers return to their farms and rural communities from the cities they will probably eat less meat. Tomorrow's weekly export sales report from the USDA will be scrutinised for evidence that Chinese soybean demand is waning.

The Chinese government has said that it will continue to buy local corn to support prices and help the rural economy.

The dollar climbed to its highest in more than three months against the euro on Wednesday hitting 1.2456. Both the BoE and ECB are expected to cut interest rates again tomorrow.

For US wheat drought conditions will continue across the southern Plains but timely rains will reach from Colorado to Georgia late this week and next, according to Allen Motew of QT Weather.

Early calls for this afternoon's CBOT session: Corn futures are expected to open 2 to 4 higher; soybeans 10 to 12 higher; wheat 4 to 6 higher

EU diplomats voted Tuesday to slap provisional import duties on US biodiesel in a late effort to support it's own beleaguered biodiesel industry.

EU producers have long complained about a system that allows US producers to get a subsidy from their own government, then ship the product to Europe and gleefully claim another one.

Under EU rules, the commission is entitled to impose provisional duties lasting six months. Any definitive measures, lasting five years, would need approval by European governments before the summer.

The commission intends to impose tariffs of 261 to 407 euros, or $328 to $511, on each tonne of American biodiesel, according to leaked sources.

The US are expected to retaliate by eating fewer cucumber sandwiches, drinking less Earl Grey and placing punitive import duties of it's own on spaghetti hoops and bratwurst sausages.

"And they can stick their triple quarterpounder cheeseburgers with everything on it where the sun don't shine whilst they're at it,” said Johnny Sausage, the secretary general of the European Biodiesel Liberation Army, in a totally non-confrontational way.

Josette Sheeran, the executive director of the World Food Programme, is warning that the current financial meltdown is deflecting people's attention away from a looming world food crisis.

"I think the world would like to focus on one crisis at a time, but we really can't afford to," Sheeran is quoted as saying by Reuters.

The WFP relies on donations, receiving $5 billion in 2008, before the financial crisis started. This year it is looking for $6 billion for food aid to 77 of the world's poorest countries.

So far however it has received just a tenth of that.

Sheeran said that she is concerned that donations will dry up as the world's wealthier countries concentrate on their own problems.

"We're in an era now where (food) supplies are still very tight, very low, and very expensive," Sheeran said.

Countries like Kyrgyzstan rely heavily on income sent home by it's citizens working abroad. As the global financial crisis worsens, this income is drying up as migrant workers lose their foreign employment. Kyrgyzstan has subsequently been forced to ask the WFP for help this year for the first time since 1992.

The WFP say that they are looking at plans to develop some kind of strategic world grain stock to help poor countries who can't compete when panic buying kicks in as was witnessed in early 2008.

But with only a tenth of the money required so far in the kitty where is the cash going to come from?

Production Minister Debora Giorgi says the government has signed various agreements with the farm leaders eliminating export taxes on dairy goods, increasing the export quota for beef and guaranteeing a higher price for wheat sold domestically.

The idea of a grain council or board to market all grain for the government has been put on the back burner for now.

Interior Minister Florencio Randazzo described the meeting as "very positive" adding "I hope this is the end of the conflict".

What concessions have the government made exactly? They have eliminated export taxes on dairy goods, increased the current annual beef export quota of 550,000 tons by 60,000 tons and raised wheat prices to 420 pesos (116 US dollars) a tonne from 370 pesos.

In the cold light of day that doesn't look like a lot to me. Increasing the beef quota 10.5% in a year where a reported million head of cattle have perished due to drought? Many of the animals that have survived are said to be underweight and not up to export standard anyway, so they won't be going anywhere. Raising the wheat price 13.5% (to £83/tonne no less, whoopee!) in a year where production has almost halved? Cheers.

There are more talks scheduled for Mar 10 at which the farm leaders will no doubt raise the thorny issue of the soybean tax again.

So if you were an Argy farmer holding beans there is no incentive whatsoever to sell them right now.

In the face of the global recession, is a question I keep getting asked.

Well there are really lots of reasons...

Firstly, world plantings are sharply lower, why wouldn't they be?

Secondly, it seems highly unlikely that MOST of the world will have weather conditions so good in 2009 that they will churn out yields as favourable as in 2008.

Thirdly, we have a situation where the current financial crisis seems to favour sharply lower inputs in 2009. Whether that is fertiliser, pesticides or irrigation, if farmers can't afford it then they won't do it.

Combine all three and we have, in my opinion, a potentially explosive cocktail of dramatically lower production in the coming season.

The way I see it is that wheat production will be down big time in 2009/10, not DESPITE the current recession, but BECAUSE of it.

I will endeavour to do some more work on this in the next few days, but with some of the latest predictions of wheat production for 2009 now rumbling through, I think that the real balance sheet for 2009/10 may look a lot tighter than many are currently suggesting.

Astonishing early reports emerging from Argentina appear to suggest that some degree of accord has been reached between farm leaders & the government.

Argy President, and all-round love Goddess, Cristina Fernandez made a surprise appearance at the talks apparently and that in itself seems to have swung it, with her sheer seething beauty winning over even the most hardened activist.

And we don't want a hardened activist all over our hands do we girls, there's nothing worse?

Exactly how these boys have "bought" this so-called deal is beyond me. Maybe Sir Fred Goodwin was involved, I don't know.

Still, there is no fool like an old fool, and if the Argy farmers don't come to regret this then my name is Ruud van Nistelrooy.

For anyone familiar with the well-known (in my circles) song by Genesis from what the early/mid 90's - I'm sorry it is too late to Google it - Nogger seems to be getting some unwanted attention from across the pond:

March corn finished at $3.43 ½, unchanged. Pretty much nobody has a clue what to do on these markets. Outside influences are heavy, from equities to crude to the dollar, fundamentals are playing second fiddle. Throw in the uncertainties surrounding Argentina in terms of crop production and political disputes and who knows where things will go from here?

Soybeans

March soybeans closed at $8.63, up 14 ½ cents, yet November soybeans closed at $7.91 ¼, down 1 ¾ cents. There was strong nearby support relative to the deferreds from uncertainty surrounding the ongoing dispute in Argentina. Still, there seem to be too many uncertainties to tempt peripheral players back into the market & who can blame them?

Wheat

Yawn, yawn, nothing new, March CBOT wheat settled at $4.90 ¼, down 4 ½ cents. US crops seem to be deteriorating but export sales are still slack. Russia is the main man & they continue to pick up the bulk of the decent export orders. Some support may arrive from export delays in Australia.

Decent rains fell over the soybean growing areas of Argentina in the 24 hours to 9am this morning:

This wet outlook is expected to continue for the next 48 hours before a drier period into the start of next week, reports Allen Motew of QT Weather.

By late in the day one to three inches of rain have fallen across Buenos Aires and southern Santa Fe with inch totals in Cordoba too. By mid-day tomorrow-an additional one to three inches will have fallen across the “heart of the grain belt” from Cordoba and Santiago del Estero to northern Buenos Aires and southern Entre Rios giving a band of 48-hour totals of three to seven inches, before conditions then dry for the next seven days, he says.

This rain event will be another key component in the amazing turn-around from early season drought and stress that devastated last year’s wheat crop, much of this year’s corn crop as well as forage and cattle too, he concludes.

Crude oil seems to have stabilised at just over $40/barrel after dropping 10% Monday, as too do the worlds stock markets which fell to multi-year lows yesterday. OPEC meet again at the middle of the month, there is some talk that with prices where they are now nobody is making any money so a serious production cut could be on the cards.

The situation in Argentina is being closely watched with a meeting scheduled for later today between farm leaders and the government.

Nobody really seems to know exactly what is going on, and whether the story about nationalising the grain trade was deliberately leaked to the press to put pressure on the farm groups ahead of the meeting.

It seems like the government proposals effectively would allow them to control what is exported and when. That way they presumably would attempt to wring as much tax revenue as possible, as quickly as possible from the agricultural sector.

The government can dress it up any way it likes (and will), but at the end of the day it is a given that there is only one sides best interests the proposed agency would have at heart. For that reason I'd say it is pretty unlikely that the farmers will want to run with it, but we shall see.

Pacific Ethanol has stopped production at two more plants, one in Idaho and the other in California.

Japan is in the market for 118,000mt of wheat, of which 55,000mt is destined to be US origin with the rest coming from Canada & the Australia. I hope they don't want the last bit in a hurry!

The US wheat crop continues to go downhill with little drought relief in the forecast this week. Crop condition ratings in Kansas, Oklahoma and Texas all fell last month.

Early calls for this afternoon's CBOT session: July corn called steady to 2 cents higher; July soybeans called 1 to 3 cents higher; July CBOT wheat called 1 to 2 cents lower.

Argy farm leaders are due to meet with the Production Minister Debora Giorgi later today in what should be a very interesting "discussion".

Leading Argy daily Clarin reported yesterday that the government wants to create a "Commercialization Agency" to influence market prices, in which it (the state) would hold a 51 percent stake.

A Production Ministry official told another daily, Pagina 12, that the new agency would be ’inspired by the entities...in Canada and Australia’ (referring to the AWB and CWB), with a focus on ensuring domestic supply and promoting domestic processing.

With mistrust of the government running at all-time highs amongst the farm leaders it seems that a move giving them the casting vote on grain & cattle exports is not going to be sanctioned easily.

On Saturday, almost 30 farm groups published full-page newspaper advertisements titled "Argentina in Reverse," warning that state intervention could spark demonstrations and paralyse the sector.

Media reports this morning suggest that Indonesian wheat buyers are being told that they face shipping delays of 60-105 days for wheat coming from Australia.

This seems to be causing buyers to hastily try to arrange purchases and shipments from other willing sellers.

One of the main problems seems to be the deregulation of the Australian grain trade.

This year twenty two different companies are licensed to export Australian wheat, previously everything was handled by the Australian Wheat Board.

All twenty two of those companies are scrambling for fixtures at Western Australia's main ports of Geraldton, Kwinana, Albany and Esperance.

The latest shipping roster from grower-owned business Cooperative Bulk Handling, who operate a monopoly over all grain exports in the state, shows sixty five vessels listed as loading, waiting to load or due at port in the next two months.

The euro fell against the dollar yesterday after European Union leaders vetoed Hungary’s request for 180 billion euros of loans to former communist economies in eastern Europe.

Meanwhile, the Swedish krona fared even worse, falling to a record low versus the euro on speculation the Baltic region’s borrowers may default, and the Hungarian forint and Polish zloty also tanked.

Eastern Europe is a very important key element in this giant mess that we find ourselves in. Vast numbers of ordinary people there have mortgages in Swiss francs, euros and even Japanese yen. For example an estimated 60% of Polish mortgages are in Swiss francs.

And if your local currency goes down the pan, your mortgage repayments go through the roof. So you default. Einstein is not required on this one.

The problem is that western European banks have invested heavily in Eastern Europe. So heavily that 75% or more of the banks in Romania, Poland, Latvia, Hungary, Bulgaria, Lithuania, Czech Republic, Slovakia and Estonia are owned by Western European banks. Fancy that, our banks making unwise and rash loans to any Thomaz, Dik or Uri.

Eastern Europe currently has $1,656 billion worth of loans outstanding, according to latest estimates. Of that, it is reckoned that 90% comes from western Europe, and $350 billion is due to be repaid, or rolled over, in 2009. Where is the money going to come from, and/or who is going to roll over that debt from in the current climate?

Top of the Pops for exposure to eastern Europe is Austria, and Sweden are pretty close to the top of the list too, although just about every western European country has significant exposure here. So eastern Europe comes a callin' asking for more help, at a time when the banks in western Europe are all reeling and reporting massive losses of their own. What response are they going to get?

Sit down Einstein.

It seems like eastern European defaults on a large scale are somewhere shortly down the line. And that spells disaster for the euro, and quite probably the pound too.

Crude oil futures fell ten percent Monday to close at $40.15/barrel on speculation that demand will continue to erode as the global economic recession worsens.

The Dow Jones Industrial Average fell below 7,000 for the first time since 1997 last night, with European and Asia stock markets also hitting multi-year lows.

Data from the US Energy Dept on Wednesday is expected to show US stockpiles increasing yet again by around 1 million barrels to around 352 million, analysts say.

With US refineries only running at around 81-82 percent of capacity, and OPEC production cuts also filtering through to the market, these ever-increasing stocks are a clear indication of just how poor demand is.

A USDA report issued after the close last night shows winter wheat conditions continuing to worsen in Texas. Oklahoma and Kansas.

The report says that as of the end of February Kansas had 50% of the crop rated good/excellent, down 9 points from the end of January. In Oklahoma only 22% of the crop is rated in the top two categories, whilst in worst affected Texas only 10% of the crop makes the top two grades.

In Texas 63% of the crop is now rated in poor/very poor condition, whilst in Oklahoma it is 42% and 15% in Kansas.

Meanwhile another week of hot and dry weather will affect the southern Plains this week, according to Allen Motew of QT Weather. The newly issued Climate Predication Center (CPC) monthly forecast keeps the southern Plains and Gulf Coast warm and dry for March, he says.

EU wheat futures started March on a familiar note, closing lower across the board in line with the recent trend.

Paris May milling wheat futures closed down EUR2.75 at EUR135.25/tonne, whilst London May feed wheat ended down GBP3.25 at GBP109.25/tonne.

The market seems to be generating into a bit of a stand-off. Farmers don't want to sell at current levels and consumer don't want to buy. Each is convinced that the market will go their own way.

World output is seen lower in 2009, significantly so by some analysts, yet prices are being dragged lower by outside influences like equities, crude oil and stocks which have fundamentally little to do with grains supply or demand.

It seems that to get this market up we need some rude awakening calls on global supply. We might just get that when the crop in the northern hemisphere finally awakes from winter dormancy.

March corn settled at $3.43 ½, down 7 ¼ cents. We started off with the now sadly familiar economic doom & gloom. A stronger USD and weaker crude added to the bearish tone. When are things ever going to get better? Never, according to the market, we are for sure all going to die a slow & painful death. The Dow index closed at its lowest close since 1997. AIG are back at the begging bowl, but then again they did sponsor Man Utd so bollox to them, they deserve everything they get.

Soybeans

March soybeans closed at $8.48 ½, down 26 cents. As with corn a higher dollar and lower crude did nothing to help beans. Also of course the global economy didn't lend too much support either. China seems to be beginning its usual switch to South America, which frequently happens at this time of year, but under current conditions may provide more of a bearish influence than normal. Even the threat of very serious ramifications from the potential disruptions to trade in Argentina from the "coup" of nationalising the grain trade couldn't support beans today.

Wheat

March CBOT wheat finished at $4.94 ¾, down 15 ¾ cents, largely due to spillover weakness from the other two pits. It is far easier to make out a case for bullishness on wheat than corn or beans. This has been well documented here recently, but factors include sharply lower world production and drought in the US Plains. For now however it seems that the market cannot look further than the global economic meltdown. It may be worth considering at this point that only a twelve months ago the world saw crude oil rising to $200+ and could not see anything other than wheat trading at stupid money. Who knows where we will be a year from now?

Falling equities saw London's FTSE hit a six year low weighed down by more bad news from financial giants like HSBC. It is of course the same the world over with AIG reporting a $61.7 billion loss and taking another $30 billion handout from the US government.

Despite the outlook for strikes in Argentina following the revelation that the government there is looking at nationalising the grain trade, Even nearby months on beans couldn't hold onto Friday's modest gains this morning.

Russia continues to take most of the big wheat tenders, frustrating US and EU exporters. Reports of shipping delays out of Russian and Australian ports don't seem to be filtering through into hard orders as yet, although Algeria may have bought French wheat over the weekend according to some.

Having been holding up very well so far this year, US soy & corn export sales took a dip last week. The trade will be hoping that this was a one-off when the USDA announce it's next raft of export data Thursday. If the numbers are poor again, it may spark fears that the Chinese bird has flown and will now begin directing most of its interests towards South America.

Crude oil is almost $2.50/barrel lower. A report later today is expected to show that US manufacturing declined in February. If your factory isn't making anything then it doesn't need any oil does it?

Early calls for this afternoon's CBOT session: Corn futures are expected to open 4 to 6 lower; soybeans 12 to 15 lower; wheat 6 to 8 lower.

In a crack-down over what he sees as food hoarding, enigmatic and ever so slightly deranged Venezuelan President Hugo Chavez ordered government troops to seize control of rice processing plants in the nation at the weekend.

"I have ordered the immediate intervention in all those sectors of agro-industry by the revolutionary government," said the unhappy bunny.

Chavez is upset that companies in the supply chain are refusing to produce rice at prices set by the government.

Some of the plants seized may well include Cargill-owned installations. according to media reports.

This thing is starting to take on all the elements of a Jeffrey Archer novel.

Cristina Fernandez de Kirchner, President and glamorous wife of the ex-Argentine leader Nestor Kirchner, apparently gave a long and moving televised speech before Congress on Sunday, offering little hope of a concession on taxes for Argy farmers, but bringing the rest of the country close to tears.

The speech was full of the same old stuff, namely that the government is trying to look after the common man - including the small family farmer - and that the country was being held to ransom by a mega-rich few.

These few "farmers", she claims, are hoarding 9 million tonnes of old-crop soybeans rather than sell them and pay the tax. There is US$150 billion in Swiss banks belonging to the elite of Argentina, she says, with a city home in the best suburbs of Buenos Aires and a beach home in Mar del Plata.

Emotionally stirring stuff. She conveniently ignores the fact that surely in a free economy the seller - whether large or small - can sell his soybeans when he bloody well likes.

Having denied the existence of a plan to nationalise the grain industry as recently as Friday, the government is now openly admitting that the plan is being discussed "at the highest level".

"The nationalization of the grain trade will push society to the edge of another unnecessary conflict with unpredictable consequences," said the Buenos Aires Grain Exchange on Friday.

The scene is now set for a very interesting meeting between the farm leaders and Production Minister Debora Giorgi tomorrow. Meanwhile glamorous Cristina won't even be in town, she is packing her Loius Vutton full of silk scanties and jetting off to London for the G20 meeting.

Farm activists meanwhile would like to re-kindle the right wing of Argentine politics, and put their own farm leaders up for elected political office at the mid term elections later this year. Oft quoted Eduardo Buzzi, president of the Agrarian Federation, for example is strongly rumoured to harbour political ambitions of his own.

But that is not all - not by a long chalk. There are strong claims that the US is moving behind the scenes of the farm dispute. Fernandez has said that the US government is trying to undermine her and overthrow the government. Fantasy?

CIA Director Leon Panetta, who said Argentina could be pushed into instability by the global financial crisis, and made remarks regarding the farmers unrest and the countries friendship with Venezuela, was forced to give a formal apology to President Fernandez on Saturday.

The links between the neo-conservative Argentine opposition and the CIA, go back to the Menem years of 1989 to 1999, when Menems wife was caught with a pallet of US dollars at Buenos Aires airport bound for Menem bank accounts in the United States at the time that George Bush Senior was in office.

The CIA involvement in South America is well documented. Chilean leader General Pinochet, had over US$10 million in CIA held bank accounts that was stolen from government coffers at the time of his death.

The CIA also allegedly orchestrated a political coup to remove Hugo Chavez from office in Venezula in 2003. In fact President Bush even went as far as embarrassingly congratulating the new President of Venezuela in a televised speech, before the coup was proved unlawful and illegal by the Supreme Court of Venezuela, and Chavez was re-instated.

Heavy congestion in ports in Western Australia, the country's largest wheat exporting state, is causing severe delays and threatening the wheat trade there, according to media reports.

South Korea, one of Australia's biggest customers, has written a letter of complaint to the Australian Embassy in Seoul asking for the situation to be sorted out quickly, or they might just take their business elsewhere in the future.

Grower-owned business Cooperative Bulk Handling operates a monopoly over all grain exports in the state. CBH reportedly stopped taking fixtures recently whilst it attempts to sort out the mess. Their website lists 69 vessels either already at CBH's four main export terminals or due to arrive during March/April. Many of the listings show vessels not due to commence loading for a month or more after arriving.

The problem seems most acute in Albany where the MV Genco Acheron is listed arriving on 26th Feb but not due to commence loading until 16th April:

Little relief seems to be in sight for drought-affected wheat crops in Texas, Oklahoma and Kansas in the week ahead, according to QT Weather's latest forecast.

Most winter wheat is currently in poor or very poor condition. In addition, top soil moisture is inadequate for spring planting in many areas. A farmer in Hill County reported dry soil 4 feet below the surface statewide, 70 percent of grazing land is currently in poor or very poor condition. Oats and winter grasses...cold season forage for many livestock...have been widely insufficient... 80 percent of oats are in poor or very poor condition...supplemental feeding of livestock has been widespread.

Heavy rains largely missed the area last week, catching only a small amount of wheat country in Eastern Kansas, say QT Weather. The week ahead will now become drier and heat up particularly across the drought stricken Southern Plains with nineties in Texas and eighties into Oklahoma and Kansas. Temperatures skyrocket to twelve to eighteen degrees above normal over the next five days Montana to Texas.

Rain relief will then cross the southern Plains late in the week and into the recently wetted areas of the Tennessee Valley and SE states. Despite additional rainfall late in the week, net drying will be the rule for the week and early next from Texas to Georgia, they say.

The two-week outlook shows drying from southern California to New York with a “rare” improvement in south Texas starting late in the week:

About Me

Worked in agriculture for over 30 years as a shipper, merchant, trader & broker, but still hasn't got the faintest idea what he's talking about.
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He can also provide content for your website like market reports and commodity prices. And if you haven't got a website he can design one for you. In short, the man's a bloody genius.

Disclaimer

All comments on this website are the sole opinion of the author, and are not capable of nor intended to constitute professional advice. Neither can Nogger give any guarantee for the accuracy of any of the information or data contained within this site.

The guy is clearly deranged and you should almost certainly ignore everything that he says.